The Bayer Monsanto merger: Blessing or curse?

This week Monsanto confirmed a record-breaking $66bn takeover of its GM seeds business by rival Bayer. The deal – if it is allowed to go ahead – would create the world’s biggest seed and pesticide company. According to Bloomberg, “The deal gives Bayer more than 2,000 varieties of seeds for crops such as corn, soybeans, and wheat. Adding that portfolio to its own vegetable, rice, cotton and oilseed offerings give Bayer a virtually unassailable position at the head of the market.”

Shareholders and lobbyists are rubbing their hands at the potential for profit and power, and campaigners are directing the expected ire at the deal, vowing to mobilise their resources to fight it – though it is unclear just what that fight will look like and how much influence, if any, it will have. More likely it will be the sheer size of the merger – creating a company that will control 30% of the global seed market – that will slow regulatory approval of the merger and may eventually topple the deal. Pressure on margins will rise as much of the deal is paid for with new debt: The German conglomerate will finance its Monsanto buy with a mix of new debt and equity. It expects to raise roughly $19 billion through a convertible bond issue and has raised $57 billion in bridge financing from a consortium of banks including BofA Merrill Lych, Credit Suisse, Goldman Sachs, HSBC and JPMorgan. (Forbes)

A recent article on bloomberg.com stated the risks for R&D in agriculture: A more important issue for competition authorities may be the effect of the deals on R&D, particularly in advancing the biotechnology that has revolutionized farming by producing traits in seeds. Monsanto, Bayer, Dow, DuPont and Syngenta dominate this market, said Dean Cavey, a managing partner at Verdant, which has done work for the companies doing deals. The looming consolidation risks undermining competition between companies to innovate and introduce new products, according to of the American Antitrust Institute, a Washington-based organization that is critical of further concentration in the industry. Fewer competitors also mean reduced opportunities for the firms to collaborate in developing seed traits, said AAI president Diana Moss.

Comments about the mega-merger are exploding with opinions deeply divided.

Shareholders express their views on the activist site https://www.bayermonsantomerger.com/

“I oppose this merger because Monsanto has a bad reputation and it would make Bayer’s repuation worse. People would be less trusting of this company.”

— Rob B., Bayer shareholder

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According to PRNewswire more than 700,000 people have signed a petition against the megamerger, several petitions are still open. Most people forget that the merger will have the biggest impact on the global fresh produce industry. We want to know from growers and all other people involved:

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